Semiconductor fabs: costs in the U.S. and Taiwan

According to Goldman Sachs Research, it costs 44% more to build a semiconductor fab in the United States than in Taiwan, which is currently the leading manufacturing location for advanced computer chips.

But the CHIPS and Science Act of 2022 aims to attract investment in domestic semiconductor manufacturing to improve U.S. competitiveness and innovation and bring the entire semiconductor ecosystem back to the U.S. to mitigate future supply chain disruptions.

At one point, the U.S. was responsible for 37% of the semiconductor market. Today that share has shrunk to 12 percent.

Kearney believes that the current capital burden to bring manufacturing back to the United States is enormous.

Thus, federal funds had to be made available to make this rebuilding possible, and while the bill was moving through Washington, several investments in U.S. manufacturing capacity had already been announced.

Semiconductor fabs

In the past, according to Kearney, this particular industry has had difficulty finding appropriately skilled labor (and suppliers) in the United States, so it has been encouraging to see that several universities, including the State University of New York and the University of Texas, are using the CHIPS and Science Act to develop relevant education and training programs.

Still, it will be several years before we see these new semiconductor professionals enter the job market.

In the meantime, creative solutions will be needed to attract what skilled labor there is.

It remains to be seen whether the Commerce Department’s announcement to require computer chip manufacturers to make childcare facilities available to workers as a requirement for receiving federal funding is one such solution.

The CHIPS Act is intended to allow offshoring of critical manufacturing capacity to the United States.

The CHIPS for America Fund provides $52.7 billion in funding for the development of manufacturing, research and development (R&D) and workforce development programs in the United States.

Of this $52.7 billion, $39 billion is for financial assistance to build, develop or modernize domestic semiconductor facilities to strengthen U.S. leadership in the semiconductor industry.